The Wealth Trap: The Rich and The Gilded Cage

The Greek philosopher used the Allegory of the Cave to illustrate deception of the mind by representations of reality, rather than true reality[i]. In this parable, inhabitants of a cave have been shackled since childhood, facing a wall, and unable to turn their heads. All they could see are shadows on the wall made by a fire behind them. When one of the inhabitants is freed and able to turn around, he sees the fire, but then rejects what his eyes are telling him as they contradict his most basic beliefs about what reality is. Only after being dragged to the cave opening and being able to behold the outside world does the freed individual start to accept that what he had treated as reality was, in fact just shadows on a wall. Plato proposes that the freed individual has a responsibility to return to his fellow prisoners in the cave and try to change their minds about what constitutes reality, even though they may react negatively to the invalidation of some of their most basic beliefs. In the present, those that truly understand the scale and urgency of the predicament that humanity faces, can see much of their own experiences in the story of the freed prisoner. Rich countries, and the rich within those countries, do not live in simple caves with mere shadows from a fire. Instead, they live in wonderful gilded cages with a seemingly unlimited number of media sources providing incredibly complex and distracting shadows.

The majority of First World citizens are able to separate themselves, both spatially and temporally, from the consequences of their way of life. The gilded cages they live in, both shield them from consequences and imprison their minds. Warnings of impending destruction being discussed beyond the bars of the cage can only be perceived as faint echoes which may cause a fleeting pause, but cannot successfully penetrate the vast majority of minds within. Through projecting the consequences of their actions to others, both in the present and the future, the richer countries have been able to construct incredibly complex — and totally unsustainable — societies. The wealthier citizens can create their own cages within a cage, to separate themselves from the lesser ranks as they enjoy a new gilded age fuelled by the looting of the earth and the dispossession of others. Just likes taxes, it is only the little people that feel the heavy consequences[ii].

As Kempf puts it, “the lifestyle of the rich prevents them from sensing what surrounds them. In developed countries, the majority of the population lives in cities, cut off from the environment where the fissures in the biosphere are beginning to show. Moreover, the majority of the population is largely protected from those fissures by the structures of collective management developed in the past; these succeed in dampening the shocks … when they are not too violent … The ruling classes, which model opinion, are even further cut off from the social and natural environment: they travel only in cars, live in air-conditioned spaces, and use transportation circuits – airports, business neighbourhoods, residential areas – that shelter them from contact with society. Obviously, they disconnect from those problems that they see only through abstract representations. As for those who are already personally confronted with the social and ecological disasters of the crisis that is underway … they have no voice in the issue.”[iii] They reside outside the gilded cage.

A Shrinking Cage

As long as those outside the gilded cage could be prevented from attaining the living standards that the rich take for granted, and kept from resisting the looting of their resources, the rich country’s gilded cages remained secure. For a few short decades after the Second World War, even the middle and working classes within the richer countries were allowed marginal places within the safe confines of the cage. Factory workers could earn “middle class” wages and aspire to the lifestyle and values of those above them in the social hierarchy. This fleeting phenomenon, created by a specific set of circumstances combined with cheap energy, was mistaken for a long-term trend by many. Numerous academic papers, and newspaper articles, discussed the embourgeoisement[iv] of the working class. Marxist dreams of a proletarian revolution would be banished as the proletariat[v] were fully co-opted into capitalist society.

Removing the shackles of colonialism and neo-colonialism, more and more nations have become relatively rich, and have therefore also become consumers of the earth and externalizers of consequences. In Asia, Japan was first, followed by Taiwan and South Korea, and finally the behemoths of China and India. In South America, Brazil (and others) changed their focus to benefit their own citizens rather than exporting their wealth and sustaining the foreign rich. Even Russia has re-established national control over its resources, and its own development. As the list of exploiters increases, and the list of exploitees diminishes, the consumption of a finite earth accelerates, making it harder and harder to sustain the rich countries’ gilded cages.

Increasing numbers of people in rich countries must be excluded to keep the truly rich in the lifestyles to which they have become accustomed, and to allow new cages to be built in the newly developed countries. As the Earth’s ability to provide raw materials for human society and it’s ability to act as a dumping ground for humanity’s detritus diminishes, even these new cages will start to shrink. The working class will fade back into temporary jobs and no jobs, and the middle class will find itself declining rapidly. Increasing amounts of debt have allowed many to live in denial while maintaining their levels of consumption, but that is only another temporary fix while the consequences will boomerang back in the future[vi][vii][viii]. Already in the United States, only the top few percent can truly maintain their lifestyles, and only those who are right at the top can materially improve their lot[ix].

Our modern civilization is simply repeating a process carried out many times before by human civilizations. As Redman notes, “the evidence of the past is that in virtually all situations where large numbers of people lived together, they eventually developed a complex social organization and a state run by an elite”[x]. The rich and powerful, buffered from the reality of ecological limits, continue to lead society on suicidal paths until even they are consumed by the resulting collapse. By the time the consequences start to materially invade their consciousness it is too late and possible avenues of survival are constrained by the ideology which supports their own elite positions, “humans react not to the real world in real time, but to a cognized environment filtered through traditional expectations and a worldview which may or may not value close tracking of local environmental indicators. Humans are also not always willing or able to forego short-term personal advantage for long-term common benefit”[xi]. The level of surreality is currently taken to extremes by post-modernist and post-structuralist intellectuals who deny that a separate objective external reality exists, such as Derrida who proposed that “There is nothing outside the text”[xii]. Humanity can reconstruct reality simply by changing the way in which it perceives and writes about it! Mainstream economics shares the same delusional mindset: it accepts no possible limits upon growth, as human genius will always magically produce substitutes for any physical resource that is in danger of being depleted or damaged.

In the past, the failure of one civilization did not affect the viability of others, and over time, the local environment could regenerate in many cases to the point of being able to again support complex civilizations. In the present, the modern globalized civilization is threatening the environment on a global scale. The resulting collapse may therefore reduce all complex human societies to a much lower level of complexity, and endanger the human species as a whole.

Excluding the Unpleasantness of Consequences

Before the growth of huge civilizations and the stratification of society into “the rich” and “the rest”, people were faced with the full life-cycle of their group’s actions. They would witness the killing and dissection of their meat, the construction of their clothes from animal hides and local plants, and the visceral reality of any sanctions brought against a straying band member. Today, apart from a few extremely rare exceptions, humanity is segmented into parts that only ever see a small piece of the whole, whether through the sheer scale and complexity of modern societies, conscious decisions to remove themselves from unpleasant realities, or the deviousness of corporations and governments in hiding the true consequences of actions that are beneficial to themselves. When asked where food comes from most inhabitants of industrialized societies would most probably reply “the supermarket”, or even “McDonalds”, with “the mall” serving as the provider of clothes and the distant “prison” hiding the penalties against those deemed to be deviant.

This of course works best for the upper middle class and more elevated strata of the richer countries, where unpleasant experiences can be outsourced to the lesser elements of their own society or, even better, to lesser societies. With their conspicuous consumption they can enjoy the majority of the dwindling cheap energy resources, and produce the majority of the climate-change gas emissions, while outsourcing the consequences to others in the present and to the future in general. With the happy delusion that the consequential future will not include themselves or their offspring, they can continue on with their extravagant lifestyles while assuming that others will pay the piper.

Think of that nice shiny, oh so friendly, smart phone that occupies many of our pockets. Critical parts of its circuitry rely upon what are called “conflict minerals”; such a soft phrase for materials garnered through expropriation, death, rape, and general violence. This is all hidden thousands of miles away in such places as the People’s Republic of Congo[xiii]. In the logic of the global market place it is cheaper to source such supplies from war zones than to support the reestablishment of viable governments, or to find alternatives. Just as it is more logical to steal from our future than accept limits upon what we can be allowed to do in the present, it is logical to steal from others rather than accept such limits.

When people in one of the richer countries fill up their cars with gasoline, do they think of the people of the Niger delta who have had their lands poisoned and their leaders murdered to keep the oil flowing[xiv]; the Iranians who had democracy taken away from them due to the impudence of a leader who wanted to use the country’s fossil fuel wealth for its own citizens’ benefit[xv]; or the South American lands which were poisoned to reduce the cost of oil production[xvi]; or the native communities that are being poisoned by the Alberta Tar Sands[xvii]; or the rural areas of the United States despoiled by “fracking”[xviii][xix]? Of course not; the consequences of modern society’s need for prodigious amounts of cheap fossil-fuel energy are hidden far from view. Out of sight, out of mind.

What about crops that are grown in water-stressed areas, irrigated by sucking up the waters of ancient aquifers which will take millennia to replenish[xx]? Their depletion of those aquifers is hidden from view until the last usable drop is gone, with more and more powerful pumps and deeper bore holes being used to make sure no usable water is left[xxi]. Of course, that will be in the future and thus will not affect those currently doing the pumping. At least, the people involved find it comforting to believe that.

Imprisoning our Minds

These islands of surreality within which the rich carry out their daily lives, help shape and direct our beliefs, values, habits and actions. They are the physical and social embodiment of the assumptions upon which complex industrialized societies are based, and, through everyday interaction, they help to imprison and delude an individual’s mind. They also provide a tremendous inertial resistance to change, as they represent a massive “sunk cost” that may be largely invalidated by the steps required to move humanity to a sustainable future. They also exhibit “path dependency”, as they are completely reliant upon a path which includes unconstrained cheap energy and never ending growth. We cannot live without them in the present, but we cannot live with them if we are to have a future.

That which is not present in our local environments is as important as what is, as those that can, strive to exclude unpleasantness from their comfortable cages. A trip to the mall to buy clothes does not include a visit to the children who make them; a trip to the steak-house does not include a visit to the abattoir; a trip to buy a new smart phone does not include a trip to the ongoing wars fought over the control of the raw materials required to produce that phone; a trip in the 2 ton SUV to pick up a burger does not include a visit to the arctic ice melting due to the increased greenhouse gases; a trip to buy a salad in the winter does not include a visit to the ancient aquifers being drained to provide that salad. We are emotional creatures and without the visceral experience of the consequences of our actions, we can too easily discount those consequences in favour of the immediate need or want.

The rich benefit greatly as they rule over the gilded cages, and they would rather keep throwing others out of the cage as it shrinks, than accept that their fabulous lifestyles must drastically change. The logical end of this, in a world of constrained cheap energy and climate change impacts, is one of neo-feudalism in the richer countries. Greece provides a good example of this, as austerity measures impact the middle and working classes[xxii][xxiii], while the rich carry on as before[xxiv]. Such changes only delay the inevitable end of the super-rich’s gilded cages, as resource depletion and ecological destruction complete the destruction of complex modern societies. By allowing the decision makers to continue to redirect consequences away from themselves, the gilded cages also forestall the changes required for modern societies to survive. Like Nero, the rich will continue playing within their protected spaces while human society burns around them.

Embodying our Delusions

As I sit writing this on the waterfront of my hometown, Toronto, I am surrounded by an army of condominiums which has taken over the old transport hubs; the waterfront and the rail marshalling yards. In an era of container ports and trucking fleets, the ships of the Great Lakes are as unneeded as the haulage trains of a bygone era. With personal cars, coaches, and cheap inter-city flights, who needs to take a train? Thus, the infrastructure required to support those ships and trains is torn down, to be replaced with condominium towers. The delusional belief of endless cheap energy and endless growth without consequences is embedded through destruction and replacement. In city after city, such short term stupidity continues unconstrained; the “wharfs” of the East End of London are now mere names used to provide a sense of history to new office blocks, condominiums and entertainment centres; the working waterfront of New York has disappeared in the same way. Some cities have already started to face the costs of such short term and delusional thinking as they reinstate the trams that were ripped out only a few decades ago, to make space for cars. In Toronto, the argument between the tram and the car continue, needlessly delaying action.

In an age of constrained cheap energy and climate change, the sheer momentum behind the building and expansion of airports is a wonder to behold. It is akin to governments striving to increase the production of cigarettes in the face of the proof that smoking causes lung cancer. In Toronto, the downtown airport is pushing for expansion so that they can grow their business, and the large suburban airport has already grown significantly in the past few years. With the profitability of most airlines paper-thin, and that profitability gravely threatened by any increases in fuel prices, or carbon-related aviation taxes, the longer-term folly of such massive investments should be obvious to all. Instead, the rich and developing societies double down on the exponential growth driven by cheap fossil fuels, leaving the consequences for others and other times.

On average, airlines don’t even make enough money to cover their cost of capital; the entire aviation supply chain made annual economic losses of between US$16 billion and US$18 billion from 2004 to 2011[xxv]. During that period, jet-fuel costs rose from 17% to 30% of airline operating costs, as higher prices swamped efficiency gains. The incredibly slim operating margins for airlines are shown in the 2014 International Air Transport Association’s forecast, indicating a profit per departing passenger of US$5.65![xxvi]. No wonder the industry is fighting to forestall against taking responsibility for the full consequences of their operations in the form of transport carbon taxes[xxvii]. Here is an industry subsidized by investors and the taxpayers in the present, while it helps destroy our collective future. On both business and ecological grounds it should be facing consolidation, shrinkage, and much higher prices. The impact throughout the economy would be significant as airports, airplane manufacturers, and myriad other suppliers share the airline companies’ painful shrinkage.

The sheer magnitude of the energy infrastructure that will be invalidated and require replacement, together with the critical pieces that will have to be rebuilt after being destroyed, put to bed any assumptions of a smooth transfer to low-carbon energy sources. We have embedded our delusions in concrete and steel, with whole industries, communities, and supply chains dependent upon sustaining the unsustainable. As Smil notes, “Because of the requisite technical and infrastructural requirements and because of numerous (and often entirely unforeseen) social and economic implications (limits, feedbacks, adjustments), energy transitions taking place in large economies and on the global scale are inherently protracted affairs. Usually they take decades to accomplish, and the greater the degree of reliance on a particular energy source or prime mover, the more widespread the prevailing uses and conversions, the longer their substitutions will take”[xxviii]. By destroying much of the infrastructure that was previously in place to support alternative modes of transportation, and hooking so many business models on unsustainable modes of transport, society is making the required transition much more difficult than it could have been.

What will become of the likes of Federal Express, Amazon, British Airways, Walmart, too-many-to-count Port Authorities, and Road Hauliers, when transport costs reflect the increasing difficulty of liquid fuel production and the environmental impact of burning fossil fuels? These only still exist due to the preordained subsidies provided to them by our, and our children’s future. They will take the profits in the here and now, and all of us will pay the costs in the future. In the case of Walmart, even in the here and now their viability relies upon government welfare checks for their staff and their customers. The general populace pays and the shareholders, bondholders, and executives profit. We live within a bankrupt economic and social model, kept afloat by the destruction of our future and the transfer of money from the average person to the rich. The result is capitalism for the poor and socialism for the rich.

As long as the Gilded Cage exists there is no hope

If the rich are allowed to stay within the confines of their gilded cages, using limousines and personal jets to scurry from one cage to another, they will drive the consumption of the earth until even their own existence is compromised. By then the rest of humanity, whatever remains of it, will be in a much worse place. In the same way that conscription forces all in society to bear the costs of war, the rich must be enlisted into experiencing the consequences of their actions before it is too late for the rest of humanity.

[iii] Herve Kempf (2008), How The Rich Are Destroying The Earth, Green Books

[iv] Rinehart, James (1971), Affluence and the Embourgoisement of the Working Class: A Critical Look. Social Problems Vol. 19 pp 149-162. Accessed at http://www.jstor.org/discover/10.2307/799480?uid=2460338175&uid=2460337935&uid=2134&uid=2&uid=70&uid=4&uid=83&uid=63&sid=21103779455167

[v] The term proletariat refers to those in society who only have their labour to offer, possessing none of the means of production.

[vi] Frizell, Sam (2014), Americans are Taking on Debt at Scary High Rates, Time Magazine. Accessed at http://time.com/8740/federal-reserve-debt-bankrate-consumers-credit-card/

[ix] Thompson, Derek (2014), The Rise (and Rise and Rise) of the 0.01 per cent in America, The Atlantic. Accessed at http://www.theatlantic.com/business/archive/2014/02/the-rise-and-rise-and-rise-of-the-001-percent-in-america/283793/

[xxv] n/a (2013), Airline Profitability: airlines can no longer afford to be the poor relations of aviation, CAPA: Centre for Aviation. Accessed at http://centreforaviation.com/analysis/airline-profitability-airlines-can-no-longer-afford-to-be-the-poor-relations-of-aviation-117521.

[xxvi] n/a (2014), World airline industry in cyclical upswing – but in search of USD125 billion annually in financing, CAPA: Centre for Aviation. Accessed at http://centreforaviation.com/analysis/world-airline-industry-in-cyclical-upswing—but-in-search-of-usd125-billion-annually-in-financing-158633

I have a BSc in Information Systems from Kingstom University U.K., an MBA in Finance from Stern School of Business at New York University, USA, and a MA in Integrated Studies from Athabasca University, Canada. I have …

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